It’s been nearly five years since the Affordable Care Act was signed into law. Since then, there’s been some confusion as to what businesses must do to comply with its many provisions. Since a new year means new legislation, we’re here to walk you through some of the new regulations that can impact small business.
Here’s a primer on what you need to know about the Affordable Care Act (ACA) for 2015.
Small Business Health Options Program (SHOP)
SHOP is specifically for small businesses with 50 or fewer employees. The marketplace can be accessed via the Healthcare.gov website or at your state’s online healthcare exchange. These sites inform employers about what they need to know to sign up for healthcare programs, including the range and types of coverage available, as well as the benefits they provide. A great place to start is the Get Answers tab.
From the state website, you will be able to get the proper applications and forms you need to sign up. Employers can purchase plans for their employees at any time during the year.
For sole proprietors or self-employed individuals with no employees, the ACA treats you as an individual. While you can purchase health insurance from other providers throughout the year, the open enrollment period for Healthcare.gov and state exchanges ends Feb. 15, 2015.
Get More Information
Your accountant should be able to help you navigate some of the complexities of the Affordable Care Act, and you can also find a great deal of information on the Labor Department website.
For example, the site provides answers to many frequently asked questions regarding compliance, grandfathered health plans, preventive health services, the effective date for individual health insurance policies, exemptions to the law and more. In particular, you’ll want to check out the Small Business Healthcare Tax Credit for Small Employers.
As of 2014, the Small Business Healthcare Tax Credit provides a maximum credit of 50% of insurance premiums paid for small business employers and 35% for small tax-exempt employers (e.g. charities and non-profits). Eligible businesses must meet the following criteria:
- Must cover at least 50% of the cost of employee-only healthcare coverage for each employee.
- Must have fewer than 25 full-time-equivalent employees (FTEs).
- Employees must have average wages of less than $50,000 per year.
- Employers must purchase insurance through the SHOP Marketplace.
To claim your Small Business Healthcare Tax Credit, fill out IRS Form 8941.
Understand Your Obligations
For 2015, there are a number of obligations that are relevant for small businesses. For some small businesses, it will be necessary to report certain healthcare expenditures in your employees’ Form W-2. This will be reported in Box 12 with Code DD.
If your business provides self-insured health coverage to your employees, you will now have to send a report to the IRS containing certain information on each employee you cover. This rule was optional for tax year 2014, but will be required in 2015. Employees will also receive this information, which they will use when filing returns for tax year 2015.
The Small Business Administration also offers guidance on new and existing requirements on their website. Intuit also offers a Key Requirements for Small Business article that lists requirements of the law to the present day.
The National Federation of Independent Business has created its own timeline of what’s legally slated to unfold between 2014 and 2018, specifying in detail what employers must do to avoid penalties. It also provides information on mandates, taxes and compliance issues that can round out the information listed on the government sites.
Plan to Keep Current
The Affordable Care Act is still a work in progress. Many regulatory details and standards have yet to be worked out. Because the rules will continue to evolve, reading the relevant regulations today isn’t enough. You’ll also need to stay abreast of future developments.
Of course, there will be ample news stories and advice from small business support organizations, such as the NFIB, IRS or SBA. But instead of depending “on the kindness of strangers,” for the next few years, you may want to establish a quarterly reminder on your calendar. That way, you’ll remember to check in with the Affordable Care Act’s progress and find out if there’s anything more you need to do to stay compliant.